Congress’s bipartisan budget agreement passed last week includes a historic funding increase for the Child Care and Development Block Grant (CCDBG), the nation’s largest federal child care assistance program. The additional $5.8 billion for the program over the next two years has enormous benefits for states looking to serve more families and encourage children’s healthy development.
Why the program needed a major funding increase
The Child Care and Development Block Grant is a federal and state program that allows states to help low-income families pay for child care so they can work or attend a job training or educational program.
The program has been on the decline, with the number of children served reaching historic lows in 2015 and funding levels in 2014 falling to their lowest level since 2002. The block grant serves an estimated 15 percent of children eligible under federal parameters.
The program was reauthorized in 2014 and established new requirements for states, including strengthening health and safety requirements and requiring states to implement policies that make it easier for families to get and keep subsidies. But the reauthorization was not accompanied by additional funds to help states meet the new requirements, and many experts anticipated further losses in the number of families served.
The reauthorization gave the program an opportunity to improve how it served children and families, but the lack of new resources undercut the program’s promise and created challenges for states working to maintain service levels while trying to implement the new requirements.
Ways the spending boost can benefit families and child care providers
The funding increase could allow states to realize some of the promises of the law’s reauthorization. Because it is a block grant, states will likely make different choices on how to best spend these funds, as states are aware of the trade-offs they’ve had to make with constrained funding and the issues they need to prioritize to fulfill the reauthorization’s goals.
States can focus on several areas as they consider how to spend these funds. First, they can use these funds to expand access to the program. They can reverse the caseload declines and expand the number of children served. The new funds could allow an estimated 230,000 additional children to be served, a significant increase from the 1.4 million currently served.
These funds can help support access for families on waiting lists and allow states to start serving families who are currently a lower priority. While many families need assistance, our work suggests states could elevate low-income families who need child care assistance to attend education and training programs to improve their ability to support their families.
States can also use the funds to fully implement the law’s promises to expand and simplify access to subsidies by implementing family-friendly policies. Our work on ways that states can make it easier for families to get and keep subsidies helped inform the development of these provisions and provides states with concrete strategies to make their services more accessible, to stabilize care for children, and to make it easier for families to stay in the program.
But states should also use these funds to pay attention to the needs of child care providers in the subsidy system, as providers are the core of the program and are essential to supporting parental work and child development. Our research suggests that investments states should consider include the following:
- Improve the quality of care by raising rates paid to child care providers. Recent work by Urban Institute researchers suggests that states should consider increasing reimbursement rates to attract more qualified providers to participate in the subsidy system and to allow participating providers to afford quality improvements.
- Improve provider willingness to serve children in the subsidy system. The Child Care and Development Fund (CCDF) has seen a historic decline in the number of providers in the subsidy system. The reauthorization directs states to implement policies that make the subsidy system more provider friendly and support their willingness to serve subsidized children. Urban’s work examines provider experiences with the subsidy system and suggests concrete steps states can take.
- Maintain the diverse types of providers who participate. The steep decline in home-based child care providers—which fell 60 percent between 2006 and 2015—merits state attention with the new resources. Home-based settings play a critical role in supporting low-income families’ ability to work and in their children’s development. These settings are sometimes the only care available to parents and are more commonly used and preferred by others. Forthcoming Urban work will look at the importance of these settings to meet the needs of families for whom center-based care is less available.
As states navigate these changes, they can learn from their peers by consulting Urban’s CCDF database, which includes information on state policy decisions.
An important opportunity for states
This promised funding boost will give state administrators who have been struggling to meet the needs of families in their state the resources to better support them. Given the key role this program plays in helping parents work and supporting children’s development, the ability to serve more families will be important for low-income families and the healthy development of their kids.
States must now figure out how to best prioritize among the various urgent child care priorities they face—which is a good problem to have.